Mostly passive AMP Wealth gets active with climate impact fund

AMP Wealth Management is launching its first Global Climate Fund saying it has the potential to become the largest climate impact fund in New Zealand with up to half a billion dollars under management.

Tuesday, December 5th 2023, 1:18PM

by Andrea Malcolm

Aaron Klee, AMP NZ general manager investment management and services, says the fund will differ from most other sustainable funds in the market by specifically investing in initiatives that deliver long-term structural change to mitigate climate change.

“The intention with this fund is to provide capital investment to businesses to develop and build the infrastructure necessary to shift the economy from one built on yesterday’s model, to one that builds the capability towards an economy with a materially lower carbon footprint,” he said in a statement.

“That is materially different to just owning shares in good companies or avoiding investment in companies involved in negative industries which only go so far in delivering good outcomes for the planet. We want to fund new initiatives that help with climate change, and our customers will be part of that opportunity.”

Klee says that could involve building new renewable power generation and storage, as well as capital investment in technologies that enable local and global economies to evolve significantly.

“That’s why we need, and are aiming for, the half a billion dollar scale for this fund, to make a real impact. The effect will encourage job creation and the development of new technologies whilst helping the reduction of carbon emissions.

“We will be looking to deploy investment into opportunities that are aligned to the fund’s purpose, but equally as important, deliver strong investment returns that enhance the long term returns of the AMP diversified funds; these are not mutually exclusive,” says Klee.

“The purpose of a Climate Fund is to invest into sustainable investments which accelerate the shift to a low-carbon economy, but this fund isn’t just about focusing on owning assets that are decarbonising, because AMP already tracks that progress across our portfolios.”

He says there is demand for this type of capital in the local and global economy, and this presents good investment opportunities for AMP customers.

“For example, the energy transition is the largest intentional reshaping of the global economy ever attempted. It is estimated that nearly US$200 trillion in invested capital will be needed by 2050.

“The opportunities are immense, and we believe the time is right to invest in these innovations and technologies and enable our customers to be part of game-changing investment opportunities that will be ahead of the sustainability curve.”

Given the purpose and specific impact the fund requires, AMP will also take a more active approach to its management – compared to its current predominantly index-managed funds.

Klee says AMP is well advanced on its consideration of initial investment opportunities and expects to make its first investments through this fund early in 2024.

In 2022, AMP committed to achieving net zero carbon emissions outcome for its investment portfolios by 2050 or sooner. It has already reduced its exposure to greenhouse gas emissions in its own portfolios by approximately 70% since mid-2021. Investment into assets that accelerate the shift to a low-carbon economy are a key part of AMP’s net zero strategy.

Tags: AMP